GM to spend $US2b for Delphi sale

General Motors Corp says it will pay $US2 billion ($A2.49 billion) to Delphi Corp to aid in the sale of the automotive parts supplier.

GM to spend $US2b for Delphi sale

06 June 2009

General Motors Corp said on Friday it will pay $US2 billion ($A2.49 billion) to Delphi Corp to aid in the sale of the automotive parts supplier to a private equity firm, in exchange for equity of a newly restructured Delphi.

According to a Friday Securities and Exchange Commission filing, General Motors, currently under bankruptcy protection, will use some of the $US30 billion ($A37.42 billion) in taxpayer funds it is receiving to help a California firm, Parnassus Holdings II LLC, acquire the auto parts maker. Delphi is struggling to emerge from its own 2005 bankruptcy protection filing.

Troy, Michigan-based Delphi is a former GM subsidiary and the automaker's largest supplier. GM will also provide a $US250 million ($A311.8 million) credit facility to aid the company before it emerges from bankruptcy protection, and a $US500 million ($A623.6 million) loan facility following the sale.

"Delphi's modified plan represents an important step in resolving the Delphi bankruptcy and in GM's own efforts to reinvent its business," said GM spokeswoman Renee Rashid-Merem in a statement.

"Relative to GM's support, the anticipated funding for the investment was contemplated in GM's revised viability plan, as well as the overall debtor-in-possession financing budget agreed to with the US Treasury prior to GM's filing for (bankruptcy) protection."

A Treasury Department spokeswoman said in a statement on Friday that it supports GM's efforts to help Delphi emerge from bankruptcy protection.

As previously announced, GM will also acquire some of Delphi's North American plants, as well as its steering business. Other "non-core" plants and assets will be sold off over time.

Parnassus Holdings II LLC, an affiliate of Platinum Equity, will operate Delphi's businesses both in the US and abroad.

A spokesman for Platinum said the company has spent three years learning the business, developing restructuring plans and helping "create a roadmap to long-term health and profitability."

"Platinum is uniquely equipped to help Delphi emerge from bankruptcy," said Daniel Whelan.